What are Market Expansion Solutions?
MARKET EXPANSION SOLUTIONS â Questions and Answers
1. What are Market Expansion Solutions?
Market Expansion Solutions or MES is one of the latest and fastest growing trends in international trade and global business practices.
The term entails the outsourcing of key market development tasks to a locally-operating and reliable service provider. Typical tasks that can be outsourced are:
- Pre-market Services
- Sales & Marketing
- Logistics & Supply Chain Management
- After-market Services
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2. When are Market Expansion Solutions needed?
Traditionally, brand-owning companies have relied on local importers to develop export markets. These importers, theory goes, have the infrastructure, local knowledge, goodwill and investment capacity to successfully insert the brand owner’s products in a sustained form.
Whereas this is often the case, more often than not this traditional type of cooperation has the following setbacks:
- Often importers show initial interest in the products, make a few imports and then simply stop purchasing.
- Brand owners are completely unaware about the type and quality of sales, promotion, branding and customer service activities carried out by the importer.
- After a long and expensive process for finding importing partners, the return over the investments and long term profitability of the partnership can be disappointing.
When companies realize the limitations of this market expansion model, they invariably come to the conclusion that:
"In order to insert their products in a sustained and well managed way, a brand-owning company must take control over the more advanced steps of the market expansion process".
3. But what does it mean âTaking Controlâ of the more advanced steps of the expansion process?
To better understand this concept, please contrast the two graphs underneath:
Graph 1.1 shows the traditional market expansion model, depicting which partner controls each step of the market expansion process. The area in red covers the tasks over which the brand owner has full control. As seen here, the brand owner has no control over most steps of the expansion process, including over critical tasks such as branding, marketing and customer care.
By contrast, Graph 1.2 depicts a more advanced form of market expansion. Under this system, the brand owner in cooperation with a locally operating MES provider is able to carry out the import, distribution, sales and after-sales services of its own products. The area in red shows that under this system, the brand owner acquires full control over 65 – 85% of the most critical steps of the expansion process.
By comparing the red areas on both graphs, we see that companies making use of Market Expansion Solutions achieve control over most of the tasks needed to expand their export markets.
4. OK, point taken, but why is it so important to have control over the latter stages of market expansion?
Having a higher level of control over advanced steps of the expansion process grants brand owners several advantages:
- Not having to depend on the performance or goodwill of any local importer.
- Obtaining full control over the local sales, branding, quality control and marketing effort.
- “Cutting the middlemen”, which in turn produces savings that increase the profit margins and competitiveness of your products.
- Being able to offer more attractive and custom-made logistic and commercial conditions to local partners.
- In certain cases, the ability to provide customer care services that make your products more attractive.
5. So if taking control over the expansion process is so obviously the right thing to do, why doesnât every company do this?
The first thing to know is: many companies already do! All major companies engaged in international market expansion acquire control over their value chains by setting up their own distribution centers, hiring local experienced staff and acquiring logistic capabilities in the territories to develop.
The big problem here is that required investments are prohibitive for most middle and even big sized firms.
Hence, partnering up with a proper MES provider, who already has invested in infrastructure and human skills is by far the best bet for middle and big sized companies.
6. Let’s make it personal: What advantages does ESFT BUSINESS GROUP offer?
- With no need for up-front investments, our clients receive access to our infrastructure and human experience located in new and dynamic export markets.
- We are able to provide custom-designed services to our clients all across the market expansion process: from Pre-market all the way to After-market services.
- Services offered by us can be acquired in a modular way, that is, clients acquire only the services they actually need.
- Middle – and big sized companies can achieve results much faster and economically by partnering up with us.
- We view our cooperation as a partnership in which we all share the risks and benefits of achieving a successful market expansion for you.
